Over P25 million for citizen owned companies
The Ministry of Health through Central Medical Stores (CMS) spent over P24.7 million making 96.6 percent on purchases spent on 100 percent citizen-owned companies in procurement of non-drug items carried out between November 2022 to March 2023.
Out of the total procurement of P26,959,091.50, an amount of P867, 406. 40 or 3.4 percent was spent on only one Non-Citizen company named Belline T/A Top Med Manufacturers (Pty) Ltd.
Assistant Minister of Health Setlhomo Lelatisitswe told Parliament when answering questions from Member of Parliament for Kgalagadi South, Samuel Brooks.
Lelatisitswe said in the period specified, because of the countrywide shortages of medicines and non-drug items, CMS did an emergency procurement by soliciting any readily available ex-stocks.
In this process, CMS requested all suppliers to show availability of any readily available ex stocks indicating their quantities and prices. Prior to placement of orders, technical evaluation of the products was done to verify if the products fulfil the quality requirements using the company’s submissions
A total value of P26, 959, 091. 50 was committed, out of which, items amounting to the value of P25, 655, 611. 40 making 95.1 percent were delivered, and items amounting to the value of P1, 303,4 80.10 (4.9 percent) were not delivered. Further that since the above-mentioned procurement was an emergency procurement and not a formal tender, to meet the dire product shortages in the country, Ministry took a decision to buy any readily available ex stocks locally to fulfil the required quantity.
He said since this emergency request was meant to absorb the readily available ex stocks locally to meet the dire product shortages; what was indicated as available by then, by the Citizen companies were supplied.
However, Citizen Companies did not have enough to meet the entire quantity required in some products. Lelatisitswe said considering the dire stocks needs in the country, Ministry included all local suppliers in the emergency
procurements made so far.
"Currently all the ITTs for CMS formal tenders are being vetted for alignment to the new requirements of the Public Procurement Act 2021, “accordingly future tenders will be reserved as required”.
He said since this was an emergency procurement to meet the emergency needs, request was made to all local companies including manufacturers, to offer readily available quantities of the solicited products.
Such once-off emergency procurements cannot help inform manufacturing demands for timely planning and execution of production activities to meet the emergencies.
In future, formal tenders will be reserved for local manufacturers to procure locally manufactured products under long term contracts to promote sustainable manufacturing.
Lelatisitswe said his ministry and CMS intends to have the offers made to the 10 citizen contractors set aside because due process was not followed in awarding them the 36 months Framework contracts for the supply of dressings.
The decision is based on the following factors, in September 2022, CMS drafted a tender document and by letter dated 23rd September 2022, sought the Accounting Officer’s vetting, approval and issuance of a tender number in respect of the tender document.
The Ministry of Health Oversight Authority approved the tender document and issued the requested tender number. The tender document was advertised effective 10th October 2022 to 9th November 2022, however, pending closure of the tendering period, it became apparent that the said tender document was not compliant with section 76 of the Public Procurement Act, to the extent that it was not reserved exclusively for citizen contractors.
By letter dated 19th October 2022, CMS requested the Accounting Officer to approve the cancellation of the tender, to enable a more compliant tender document to be prepared.
The Ministry of Health Oversight Authority approved the cancellation of the tender, further directing that a new tender be issued in compliance with the Public Procurement Act.
Pending the preparation of a more compliant tender document, instructions were received from the Accounting Officer for the direct appointment of a specific number of local citizen manufacturers, and that due process in terms of the Public Procurement Act and the Economic Inclusion Act be followed. Consequently, a list of local dressings manufacturers from the Ministry of Trade and Industry (MITI) was sought.
In response, MITI forwarded a list of 12 PP manufacturers, 10 of which were citizen owned companies, whereas two were non-citizens. Without following due direct procurement tendering processes as prescribed in the Act, the 10 citizen manufacturing companies were requested to submit price lists for their products, which price lists were then used to determine the average prices per product.
The 10 citizen manufacturers were then offered 36 months’ framework contracts to supply specific dressings, at the determined average prices. Subsequent to the contract offers aforesaid, it appears six other citizen manufacturers queried their exclusion from the offer.
It was then that it was realised that due procurement processes were not followed in offering the 10 citizen contractors the 36 months framework contracts, and subsequent to the realisation, CMS is in the process of instructing the Attorney General to have the offers set aside, through judicial review, as they were made ultra vires (beyond the statutory powers of) the Public Procurement Act.